Morrisons is cutting sick pay for unvaccinated workers who need to self-isolate, as the UK’s fourth largest supermarket tries to pare back the “biblical costs” of the pandemic after a profits slump.
David Potts, the chief executive of the Bradford-based group, said the pay changes were among a number of strategies Morrisons was using to mitigate cost rises from shortages of HGV drivers, supply chain disruption, and the growing wholesale prices of commodities, including beef and wheat-based products such as bread.
In a financial update to the City on Thursday, Morrisons acknowledged it was facing “sustained supply chain cost increases” outside its control, and predicted that would mean price rises for shoppers across the retail industry in the coming months.
Morrisons, which is set to be auctioned off for at least £7bn next month, said pretax profit before some one-off items fell by more than a third to £105m in the six months to 1 August. One off costs included £5m in fees related to the prospective takeover.
Profits were also held back by £41m of direct Covid-19 costs plus £80m less earned from cafes, fuel and food-to-go, as habits changed and government restrictions were imposed during the pandemic.
However, the group said it expected to exploit rising sales in the second half of its financial year. It signalled that it was on track to make profits of more than £431m for the full year – the level it would have achieved in 2020 had it not given back £230m in unneeded government aid. Morrisons said it was not budgeting for many extra Covid-19 costs, and that it expected profits in its online and wholesale operations to rise.